What's a Business?

Grandad, what's a business? This is a simple question but like many simple questions the answer is a bit more complicated than you might expect. Complicated but easy to understand if you let Grandad explain.

Quite simply, a business is a group of people who are joined together to sell something to bring in money, referred to as "income".

A business can be very small, even just one person. This small business can have a legal form or the person can just consider himself (or herself) to be "self-employed". Even a one-man business must bring in enough money to pay for his living costs. Otherwise he will need to get a job in another business or live on social security paid out by the government and that is no fun at all.

The size of business that we meet most often is as small as 2 or 3 up to as many as several hundred. These companies are often referred to as small and medium-sized enterprises (SMEs). They normally have a legal status such as "partnership" or "limited company".

The big beasts in the business jungle can be very large indeed, often with thousands of employees and many millions of pounds income and are usually "Public Limited Companies" (PLCs). All these businesses are important and Grandad will tell you more about all these businesses in the next few days.

Let me tell you now about the money earned by a business, called "income". This money must be enough to cover what are called costs or "expenditure". Costs are all the expenses that the business incurs: the materials the business might have bought, rents, wages and money paid to other people. Costs can include a whole lot of other things such as computer cost, telephone bills, insurance, heating, transport etc.

The idea of a business is that income should be more than expenditure, If income is greater than expenditure, the difference is called a "profit". If income is less than expenditure then the business is said to make a "loss".

Making a loss is a BAD THING. If losses continue then the business cannot carry on and is said to be bankrupt. The business has no money to pay its bills.

Profit therefore must be a GOOD THING. Not everyone agrees but Grandad will explain as we go on why profit is a VERY GOOD THING.

There is an in-between result which is called "break-even", which is not a loss and not a profit. Normally a business can survive in a break-even state but it brings problems that we can talk about later.

Grandad has not yet mentioned the greatest contribution that businesses make to all our lives - TAXATION. Businesses are a rich source of TAX, which our government needs to pay for schools, the National Health Service, roads, police, firemen, the Army, Navy and Air Force, old age pensions etc. Our politicians have great ideas on how to spend money but they have no money to spend unless businesses create TAX.

There is a tax called CORPORATION TAX which is charged as a percentage of the profit the business makes. However businesses create tax for the government in many other ways. Everyone who gets wages or a salary from a business pays INCOME TAX and the business pay NATIONAL INSURANCE for each person working for the business. No business, no wages, no income tax, no national insurance. Businesses charge VAT (Value added tax) on most things they sell They pay what they collect (less what VAT they have paid to other businesses) to the government. Owners of a business can take money out of the business in the form of what are called "dividends": INCOME TAX is paid as a percentage of these dividends. Finally owners can sell a business to somebody else and if they do, they pay CAPITAL GAINS TAX on the sale. If a business buys insurance, it pays INSURANCE TAX. If it buys goods from abroad, it often has to pay TARIFFS to the government.

Corporation Tax, Income Tax, National Insurance, Value Added Tax, Tax on Dividends, Tariffs, Capital Gains Tax all help in paying for things we value such as schools, police, defence and the National Health Service. Without these taxes the government would not have enough money to pay for these things. By the way, businesses also pay COUNCIL TAX which pays for local services such as street cleaning, parks, playgrounds and many other things we take for granted.

What Makes A Brand Great Today?

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Authenticity is the standout consumer value in 2017. What does 2017 have in store for us as marketers? According to the research reports released by Euromonitor International the one factor that is going to create the maximum impact is ‘authenticity’. If marketers really want to connect with the millennial consumers then they need to work on their authenticity.

What is also important to note is that the Edelman’s Annual Trust Barometer showed a global decline in trust with less than 50% people trusting brands? The bigger the brand the lesser the trust. One of the main reasons for this has been the Internet .It has made consumers very informed and brands need to work hard to establish their authenticity. They need to take specific steps to show consumers that they truly care for them.

The search for authenticity has seen a rise since 2010. According to psychologists some of the key factors why consumers are getting drawn to products that claim ‘authenticity’ were trends like globalization, economic crisis, and technology.

Globalization is making the world uniform with everybody drinking Coca- Cola, eating McDonald’s and wearing Nike. This is making lots of people crave for home made, traditional, authentic stuff. The economic crisis has made people trust less the big and fancy brands and reach out for simple, small-scale things. Technology has now changed the face of everything including our vegetables and fruits. We have genetically modified fruits and veggies today. All this has made people want the same simple stuff once more, which they can trust.

So all marketing campaigns have latched on to the new buzzword and started touting their brand as the most ‘authentic’. Go to a supermarket and you will be flooded with products each one claiming to be the real thing, the most authentic, the genuine one, the number 1, the best, the oldest etc. So much have these words been used and abused that they have lost their appeal and their meaning.

THE RISE OF THE NORMCORE The new generation does not care how loud you as a brand shout out from the rooftop how authentic you are. For them authenticity stands for something totally different. It does not anymore stand for heritage, the originals, and the first ones. Instead they define authentic as brands, which have a mission, brands, which are changing lives, brands that are ethical and honest. It stands for brands, which are innovative.

This has given rise to a new trend labeled by many as ‘normcore marketing’. It is a mash up of ‘normal’ and ‘hardcore’. Gone are the days of glitzy ads showing the glamorous lifestyle. Now what works is a down-to-earth, normal, brand positioning showcasing the ‘normal lifestyle’. It could be considered as retaliation to mass production, technology, airbrushed images, and a craving for handcrafted, homemade, authentic stuff. GAP was one of the first to adapt this trend and came out with its ‘Dress Normal’ campaign. In fashion terminology that would mean embracing ‘sameness’. The attitude of the new consumers is to strive to merge rather than standout, to be similar instead of different. For brands it means ‘mundane’ is what is attracting the new kids on the block. Anti-trends is the new trend. Big brands, glitzy expensive fashion is not appealing anymore, rather it’s all about small, authentic, real, normal stuff. As marketers we need to remodel our goods and market them differently.

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THE RISE OF TRANSPARENCY
 Consumers normally rank a brand on the basis of three attributes Reliable, Respectful, and Real. A brand is considered reliable if it delivers on the promise and is of high quality. It is considered respectful if it treats its consumers with respect and protects their privacy and data. If the brand communicates honestly, and acts with integrity it is considered Real.

So in the recent battle of the FBI vs. Apple, the brand did not budge from its stand and refused to share personal information of the customer with the FBI. Today not just the technology companies but so many others too own so much personal data of the consumers and if they want to be considered as authentic they should not share the data or misuse it.

According to the rankings of Cohn & Wolfe the world’s most authentic brand is Disney, followed by BMW, Microsoft, Amazon and Apple. The other 5 brands that made it to the top 10 were Intel, Audi, Samsung, Adidas, and Lego. In spite of the exploding Galaxy Note 7 the brand seems to have retained its authenticity tag. This is because it has been honest about its mistakes, recalled faulty products and fought hard to win back the trust of the audience.

McDonald’s may not yet have made it to the top 10 most authentic brands but it is working hard towards it. McDonald’s Canada’s ‘Our Food your questions’ campaign has been the most talked about transparency campaigns. It tells the customers to openly ask anything about its products and gives McDonald’s a chance to dispel rumors and stand by its products. The campaign has received more than 40,000 questions and more than 3 million visitors since its launch in 2014. The brand went ahead and even uploaded a video of its beef processing plant to prove that the patties were made from real cows! McDonald’s has been targeted the most with lots of unflattering rumors surrounding it and the company is putting all efforts to build back the trust.

Southwest Airlines in the US has built its brand on the premise of being a low-fare airline. That is the heart of its business model. In order to make the consumers believe that there are no hidden costs or fees the company started a campaign called “Trans-fare-ncy”, where it showed its dedication towards low fares. The people loved it and the campaign garnered not just 5 million likes on its Facebook page but a whole lot of trust from the people.

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Food is the least trusted of categories so Panera Bread promised its customers that it would stop using artificial ingredients. It launched a campaign “Food as it should be” where it displayed its menu that listed all the details of the ingredients used, the nutritional information and also an animal welfare report. All this just to show that its food was healthy and safe.

The clothing company Patagonia started a campaign called “How is your clothing made” The aim was to make customers aware of free trade certified factories where workers were paid higher wages. The consumers loved it and liked it not just on Facebook but also with their hearts.

That is how important authenticity has become in today’s world of very aware and informed consumers.

The re-birth of the CMO  The Chief Marketing Officer of the future is no more one whose sole job is to look into the branding and marketing aspects of the brand. Today he is expected to know about all the tools and techniques needed to measure the customer’s voice and understand his buying behavior. If the brand has to do well it is critical that every member in the organization learns to think from the point of view of the customer. It is the CMO’s job to drive that customer –centric mindset within the organization.

The CMO today has to look beyond the traditional methods of marketing and brand building. Today a brand’s reputation and its ability to differentiate itself from competition is the key to survival. In todays dynamic and volatile market points of differentiation get blurred very quickly and if one is not swift and quick to spot the trends one could be wiped out of business in no time. The market is highly disruptive and CMO’s needed to ensure that the brand is always innovating and delighting the customers.

Unilevers has merged the CMO and CSR (corporate social responsibility) roles into one. In many organisations the CMO is spending more on IT than the CIO. Marketing today has become a lot about data and the chief of marketing has to transform accordingly.

In conclusion, if we as marketers want to make our brands great we need to come across as authentic. We need to be transparent in our communications with the consumers. We need to listen closely to them and respond, reform, transform accordingly.

Consumer Maange More!

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The times are changing and so is the customer. The culprits are technology and the Internet. Thanks to them, things are changing at breakneck speed for marketers as the Internet and the technological revolution has made the consumer want more and more and there seems to be no stopping. In the early days, it was all about identifying the needs and wants of the consumer and trying to satisfy those needs with the right product. That product was then wrapped around an alluring message highlighting the benefits of the product and how it would change the life of the buyer. That’s all changed now. Today, it’s no more just about the product, its benefits and the branding message; it’s about the ability of the brand to connect with the consumer, to build a lasting relationship with the consumer. And that has become a difficult task for the consumer of today is insatiable and ‘maange more’ before he trusts you with his loyalty. Consumer maange more value Marketing was all about building a brand and giving people value for money. That’s not enough today. The consumer of today wants more than just ‘value for money’. He also wants to know what values you as a brand stand for. More than 80% of consumers believe that a good brand is one which places equal emphasis on both business profits and societal issues. Your brand should stand for a purpose beyond profits. It should have a purpose driven brand story. Responsible consumption is the buzz word today. With our world being plagued with problems like global warming, water scarcity, obesity etc., the consumers are becoming aware of the role companies and brands can play to make the world a better place. By supporting brands with a strong purpose, they feel they are doing their bit too to make the world happier, healthier, greener and cleaner.

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Take the case of Kissan. It decided to source sustainably produced tomatoes, which not just differentiated the brand but soon made it the number one ketchup brand in India. The Lifebuoy brand of soap ran a campaign called “Help a Child Reach Five”, which focused on teaching children how to wash their hands correctly as India has the highest number of child deaths due to diarrhea and pneumonia. The brand developed a hand wash which could change its color from white to green in 10 seconds – just the time required to kill most of the germs. Children wait to see the color change, which is not just fun but life saving too! The brand showed its commitment to a purpose, a cause, and was loved for it. Nike’s “Find Your Greatness” campaign went beyond celebrity athletes and urged people to find greatness in everyday people. It struck a chord with the viewers and inspired them. Brands are moving on beyond just showing the benefits of their product. Rin is a good old brand which for decades has promised ‘Chamakti Safedi’. That’s not enough to stay above competition. Rin has gone a step ahead. While clean clothes give you confidence, Rin has gone on and started a Rin Career Academy, training people in key skills which give them confidence. Skills like speaking good English, dressing appropriately for a job, handling an interview. Rin has shown that it is totally committed to building confidence. That’s a purpose which goes beyond profits. Patagonia is a brand that makes money by selling clothes, yet when it launched its ad campaign, it was all about encouraging people to repair their old outdoor garments. The ad provided a lot of tips and tools to help the users fix their own gear. It even offered to buy back gently used garments. Marketers at Patagonia are very clear that it’s the era of unconventional marketing. A brand that can market itself as one supporting a cause, supporting sustainable development would be noticed and liked much more than a brand that made fabulous, yet ‘harmful to the planet and its people’ products. To show how committed it is to its purpose, Patagonia established a $20 million venture fund to invest in socially and environmentally responsible startups. Whole Foods is another brand that has shown that it stands for sustainable development and sensible consumption. It has a concept called “Community Giving Days” where 5% of that day’s net sales are given to local non-profits. All through, consumers have been let down by their governments, their leaders, their NGOs who have failed to bring about a positive change in their lives. These consumers are now looking up at brands who have the power, the money, the creativity to help change this world for the good. These are the B Corps – ‘Benefit Corporations’ – who are going to rule in the future and its their marketing campaigns that the consumers will like, and share and believe in. A purpose-driven brand also has the most positive and motivated employees who are proud to say that they work for a brand that believes in something beyond profits. LRXD is a full service agency but it calls itself the ‘health and happiness advertising agency’ for it took a policy decision to primarily work for brands that helped make life better. Made Movement, an agency founded in 2012, decided it would work for brands that provided jobs to people in the US. Their purpose made them reject work from a lot of big brands, but they say life has never been better for they have a reason to wake up every morning and come to work. According to a 10-year-long study conducted by Millward Brown and Jim Stengel, brands which focused on a higher purpose did not just build the deepest relationships with customers, but also achieved the greatest financial growth in the 10 year period of the study. It’s no more about what you sell; rather, it’s more about what you as a brand and an organization stand for. So give the customer not just a great product but a great product that also does great things and he will be your greatest fan and friend! Customer maange more speed The consumer wants everything now and if you want his loyalty, you need to cope up with his demands. Take for example the purchase behavior of customers. Gone are the days when he would wait for the shop to open and buy. Today, he wants to buy whenever he pleases (thanks to e-commerce) and add to that the fact that he wants his shopping delivered at the soonest. While shopping online, a delivery period of two to three days was acceptable some time back. Now, he wants same-day-delivery. Soon, he would want everything delivered at his doorstep as fast as a pizza. The consumer of today not just shops any time of the day, but is texting and messaging his friends at all hours. Soon, he would want to text and receive texts from companies. A recent survey by Corvisa (a cloud communications provider) found that 77% of consumers were okay with getting text 

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messages from companies and in fact liked it if the companies texted them about things like fraud alerts, payment reminders, sales, discounts, promos etc. If you as a marketer can use this tool to engage with your customer, there is no better way to build a long lasting relationship. He texts you like he would a friend and you text him back – that is the speed of communication you should be prepared for. Gone is the concept of ‘contact during office hours only’. If you want to retain your market share, you need to behave just like your customer wants you to or else some other young brand will replace you. Speedy deliveries, speedy text responses will see your profits speeding up! Customer maange more connection Marketing is no more a ‘one-to-many’ style of communication; rather, it’s now all about one-to-one. From being a monologue – where the marketers spoke and the consumers listened – now, it’s a dialogue. The consumer speaks and the marketer is expected to listen and respond if he wants to build a long lasting relationship. Not just that, the customer also likes to be spoken to about things he enjoys. Hence the rise of ‘programmatic advertising’. One ad, however brilliant, will not work any more. Soon, marketers would be expected to customize and make multiple advertisements to suit the tastes of different types of customers, and technology is making it possible to do this. Programmatic buying identifies users and groups them according to the sites they browse and then offers them advertisements and promotional materials of products and services that match their habits and tastes. There is growing evidence that consumers are getting bored and irritated with advertisements that don’t interest them. With the help of technology, now marketers can identify the choices of the target consumers and place their ads in front of only those who are interested in that particular product or service. Brands like Nike, KLM Royal Dutch Airlines and Kia Automobiles are using programmatic buying to micro-target their audience and send them ads customized to suit their tastes and build better connections with them. The Future As a consequence, the whole environment is changing. A marketer needs to look beyond his marketing campaigns and promotions and focus more on the very tech-savvy consumer and his overall experience vis-à-vis the brand. Be it the online visit experience, the in-store shopping experience, the purchase experience and even the post-purchase experience, he needs to understand the big data, its analysis, interpret the results wisely and make the required changes to help improve these experiences. As marketers, you need to find out who are the social influencers, and try to make them your ‘digital brand ambassadors’. As a vigilant marketer, you also have to keep track of conversations happening on the social media. Thanks to the developments in technology, today’s marketers have a huge amount of data detailing the digital lives of their customers, giving them extraordinary power. They can now run sharply focused campaigns, reach their target audience much more accurately, respond to disgruntled customers with greater speed, get deep and accurate insights into the purchase patterns of their customers. Everybody wants to do good, but then, not everybody can. If you combine your business profits with purpose, you don’t just win a lot of goodwill from your customers, but you also help them satisfy that latent need within them of giving back something to the society, which is very fulfilling and satisfying. Soon, no one would care about the S&P 500 list or the Fortune 500 list; but they would demand a Helping the Unfortunate 500 list, for the latter would be a list of companies who would be making a difference to the planet and not just their balance sheets. So go ahead, use technology to understand your market better, add a purpose to your marketing campaign, unleash your creativity and delight your audience like never before, and give him more than the conventional dose of marketing. Give him a dream and a hope of a better world!